A think tank called the New Economics Foundation has just recommended putting National Insurance on Rental income. They reckon it'll raise £3.2bn. Let me explain why this is one of the most economically illiterate proposals I've seen in a long time. Their argument is simple. Rental income isn't subject to National Insurance. Employment income is. That's unfair. On the surface that sounds reasonable. Until you think about it for more than 30 seconds. National Insurance exists to fund state benefits the state pension, statutory sick pay, maternity pay. Things tied to employment. Rental income is investment income. It's capital deployed into an asset. It's not a salary. It's not employment. It has nothing to do with the employment benefit system. Taxing it as if it were employment income isn't closing a loophole. It's just inventing a new tax on investment. And here's the bit the NEF have either missed or chosen to ignore. Landlords don't absorb tax increases. They pass them on. Section 24 — the restriction on mortgage interest relief — was supposed to hit landlords. Instead it hit tenants. Rents went up. Supply went down. The people the policy was designed to protect paid the price. This would be exactly the same. Higher operating costs. Squeezed margins. Landlords exit or increase rents to compensate. Who suffers? The 6 in 10 tenants already renting for longer than they planned. The 32% who describe themselves as feeling trapped. The 1% successfully making it into homeownership. And the NEF — a think tank that presumably cares about inequality — is recommending a policy that makes their situation worse. Not better. I genuinely don't understand how you sit in a room, run the numbers, and think this is a good idea. Supply and demand isn't complicated. Make it more expensive to supply rental housing and you get less of it. Less of it means higher rents. Higher rents means more trapped tenants. That's not ideology. That's just maths. (c) Jim Holland

Posted by Cristian Bunescu at 2026-06-10 14:33:21 UTC